Archive for Thursday, January 13, 2005

No breaks extended on sewer impact fees

January 13, 2005

Last Thursday, the De Soto City Council continued its recent trend of making key decisions concerning the new sewer plant.

On the same night the Council agreed to start borrowing money for the sewer, it reconfirmed its development fee and monthly rate schedules designed to pay off the debt. In doing so, Council members agreed to enact increases in fees charged to new development as early as next month.

Last month, the Council agreed to fee schedules that would increase monthly user rates to an average 6.2 percent from 2005 through 2009. It also agreed to increase development fees of $1,600 on new single-family homes and $1,500 on multi-family units. But at that meeting, Council members didn't exclude the possibility of extending some breaks to several ongoing development approved before they started discussing the need to add sewer capacity.

City Administrator Greg Johnson presented the Council with a number of options that would exempt or reduce development fee increases on three subdivisions started before the city became aware of its sewer capacity limitations.

Johnson shared a worksheet indicating that exempting Timber Trails, Timber Lake Estates and Country Village Town Homes from the impact fee increase would reduce the amount of revenue available to repay the bond by $104,000.

Councilwoman Mitra Templin said she could justify some arrangement, perhaps excusing new development in the three subdivisions from the fee increase until the new sewer plant was finished.

"They made business plans before we were aware we had a sewer capacity problem," the councilwoman said.

But other Council members objected, saying the only other place to raise revenue was through rate fees to customers.

"Is it right for us to raise the rates on 500 people so three people don't have their rates raised?" Councilman Emil Urbanek asked. He later noted there were 904 city sewer customers who would have to pay on average $115 more if the developments were exempted from the fees.

In the end, the Council unanimously agreed to support the immediate increases.

"It was a tough decision, but it was the right one," Mayor Dave Anderson said.

The increase "shocked" Bob Dannevik, the developer of Timber Trails Estates, he said. He attended the meeting hoping the Council would phase in the fee increase or exempt the three developments.

The fee increases would decrease his profit margin on the project, Dannevik said, but his real concern was about how the process was handled.

"We're not saying don't raise them," he said. "If they would have given us six months to two years, I would have been happy."

The city should adopt a process like that in Gardner, Dannevik said. There, the Council discussed development fees in July that were to become effective at the start of the next year, he said. Developers and builders were notified of the impending fee increases in September, he said.

Such a system would prevent developers and builders from having to eat fee increases on homes under contract, as happened to one of his builders with the last round of increases, Dannevik said.

Dannevik said his circumstances, and those of the other developers, were special. When he did his business plan with his banker three years ago, he visited with city staff about sewer and water capacity and was told there was no problem, Dannevik said. Since that time, he has experienced two rounds of system development fee increases, hiking fees from $5,900 to $10,500 per lot, he said.

"Seeing how quickly they've gone up and how high, it's a little scary," he said. "There are other pieces of ground I could buy here, but I just don't think I'm going to. Right now, I'm concerned about paying the money, getting on and getting out."

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